Whether AP have a fragile service or not is irrelevant. Registered post only covers for loss, not damage. A seller can put anything they like in their TOS, but in the end they are responsible for getting the item to the buyer in the advertised condition. I can't see how the OP could have paid for insurance, as that only kicks in for $100 and over. In fact, they did pay for non-delivery insurance (the only sort available from AP) by paying for registered post.   Sprinkles, the seller is AP's customer, not you, so there is no point you trying to claim anything with AP, except to get them to confirm whether the packaging was acceptable or not.

In the end the seller does what is agreed in the terms. There seems some debate about when ownership transfers the the buyer.